Property market watch

One section of the property market is putting on a real growth spurt this spring. Homeowners in London and the South-East reaching retirement age are fuelling the demand for small, easy-to-maintain homes.

Many downsizers will be hoping to boost their pension funds from the equity released by the sale of the family home, so they may have received a recent gloomy message from pension provider Standard Life with scepticism.

Standard Life recently calculated the amounts by which a pension might increase if someone sold a big house and downsized in the same area. The result was a sizeable shortfall in the hoped-for annual pension.

Pinning your hopes on rising property prices to fund retirement may be over-optimistic, but if, 15 years ago, you were canny enough to buy a property in now-fashionable Salcombe, in Devon, or Primrose Hill in north London, your gamble may have paid off handsomely.

However, the reality for many is selling up and downsizing to a different, and probably cheaper, area altogether. The kind of property that retirees are buying has also changed.

Charles Rosling of Knight Frank's South East residential development team says: "The Baby Boomer generation, which holds 80 per cent of the nation's disposable wealth, is not looking for any old retirement property. They want something modern and chic, often in addition to a second home abroad." Only a few years ago, the subject of retirement apartments was a media turn-off, a big yawn. Editors did not want white-haired wrinklies beaming out from their pages. But, as Rosling says, we live in a society where there are more people over the age of 55 than there are under 16.

Developers have reacted by building apartments with communal gardens and rooms big enough to take large pieces of furniture from the family home. The problem is they cannot build them fast enough, in the places where retirees want to live.

Pegasus Retirement Homes estimates there will be a shortfall of 62,500 private sheltered homes by 2020. According to its survey of buyers, more than 80 per cent were downsizing. The average price of a Pegasus property is about £270,000 and most downsizers are moving from a £500,000 home, where they have lived for 30 years or more.

Across the UK, 29 per cent of sellers are downsizers, although the figure falls to 14 per cent for properties worth under £500,000, according to estate agents Savills.

Pegasus chief executive Peter Askew says: "The cost of making an existing family home age-friendly can be high, and people are often unable to afford these adjustments. Downsizing means people are able to live in an environment designed to cater for their changing needs, but also to enjoy their released capital."